More on lumber:
Lumber Prices Are Falling Fast, Turning Hoarders Into Sellers
Lumber prices are falling back to Earth.
Futures for July delivery ended Tuesday at $1,009.90 per thousand board feet,
down 41% from the record of $1,711.20 reached in early May. Futures have declined 14 of the past 16 trading days.
Cash lumber prices are also crashing. Pricing service Random Lengths said Friday that its framing composite index, which tracks on-the-spot sales,
dropped $122 to $1,324, its biggest ever weekly decline. The pullback came just six weeks after the index rose $124 during the first week of May, its most on record. Random Lengths described a chaotic rout in which sawmill managers struggled to provide customers with price quotes. It said late Tuesday that its index had dropped another $114, to $1,210.
“I don’t think $1,000 lumber prices are the new normal,” Devin Stockfish, chief executive of lumber producer
Weyerhaeuser Co.
WY 0.20% , told investors at a conference last week. “But that being said, when you think about the amount of housing that we’re going to have to build in the U.S. over the next three, five, 10 years, that’s just a significant amount of demand for wood products.”
At the same conference, executives from lumber producer
PotlatchDeltic Corp.
PCH 0.45% said
they expect lumber to trade in a range of $700 to $800 through next year. That is still more than the pre-pandemic record of $639 and is based on their estimation of the price that mills in British Columbia need to break even sawing North America’s most-expensive logs. Prices below that could prompt mills in Canada to dial back output or shut down, which would eventually force prices higher to meet demand, they said.
The stock market is assuming even lower lumber prices ahead. Analysts with BMO Capital Markets recently calculated that the share prices of three Canadian firms that have become
the biggest sawyers in the southern pinelands have priced in expectations of $447 lumber next year. That would be a little more expensive than normal, but more in line with historical prices.
